Master thesis
Nijmegen School of Management
The influence of regulatory pressure and financial
and economic green interests on the adoption of
sustainable process technologies in Dutch
manufacturing companies
Name:
Student number:
Lesley Paul 4339274
Educational programme: Business Administration, specialization Strategic Management Supervisor: dr. Paul Ligthart
Abstract
The study examines the influence of regulatory pressure and financial and economic green interests on the adoption of sustainable process technologies. A specific measurement for the regulatory pressure is the Wet Milieubeheer. The specific influence of the Wet Milieubeheer has not been studied yet. This research shows that regulatory pressure is very important for the adoption of sustainable process technologies. The Wet Milieubeheer turns out to be a good example of regulatory pressure. Most companies are aware of the obligations resulting from this regulation and also want to fulfill these obligations for several reasons. Financial and economic green interest do not have a significant effect on the adoption of sustainable process technologies. The most common reasons for investing in sustainable process technologies are saving costs or a better competitive position. Financial and economic green interest partially affect the influence of awareness of laws and regulation on the adoption of sustainable technology, but do not affect the influence of policy enforcement on the adoption of sustainable process technologies.
Inhoudsopgave
Chapter 1 – Problem statement and core concepts ... 5
1.1 Introduction ... 5
1.2 Problem and research question ... 7
1.3 Practical and theoretical relevance ... 8
Chapter 2 – Theoretical framework ... 10
2.1 Sustainable process technology ... 10
2.1.1 Sustainable development ... 10
2.1.2 Sustainable process technologies... 11
2.2 Adoption behavior ... 13
2.3 Regulatory pressure ... 14
2.4 Financial and economic green interests... 16
Chapter 3 – Hypotheses and conceptual model ... 18
3.1 Regulatory pressure and sustainable technology adoption ... 18
3.2 Financial and economic green interests and sustainable technology adoption ... 19
3.3 The moderating effects of financial and economic green interests ... 19
3.4 Conceptual model ... 20
Chapter 4 – Methodology ... 22
4.1 Mixed-method study ... 22
4.1.1 Quantitative research ... 22
4.1.2 Qualitative research ... 26
4.2 Reliability, validity, quality and ethics ... 27
4.2.1 Reliability, validity and quality ... 27
4.2.2 Ethics ... 28
Chapter 5 - Research results ... 29
5.1 Quantitative analysis and results ... 29
5.1.1 Assumptions Regression analysis... 29
5.1.2 Scaling of the independent constructs ... 29
5.1.3 Adoption of sustainable process technologies ... 30
5.1.4 Results of the Regression analysis ... 30
5.2 Qualitative analysis and results ... 36
5.2.1 Sample ... 36
5.2.2 Descriptive of the constructs ... 37
5.2.3 Qualitative validation of the hypotheses ... 43
5.3 Conclusion quantitative and qualitative analyses ... 50
Chapter 6 – Conclusion and discussion ... 54
6.1 Conclusion ... 54
6.2 Discussion ... 55
6.2.1 Theoretical implications ... 56
6.2.2 Practical implications ... 57
6.2.4 Future research ... 58
6.3 Recommendations... 59
Annex 1 Interviewscript ... 64
Annex 2 Quotes from the qualitative analysis per construct ... 67
Annex 3 Assumptions regression analysis... 77
Chapter 1 – Problem statement and core concepts
1.1 Introduction
Environmental problems are nowadays more important than ever. On 12 December 2015, at the Paris Climate Conference, 195 countries agreed and adopted on the first binding global climate deal: the Paris Agreement. The main aim of the Paris Agreement is reducing emissions and it has a long-term goal of keeping the increase in global average temperature to well below 2 degrees Celsius (United Nations, 2015). Since then, politicians in the Netherlands have been working on implementing a new climate agreement, where the emission of greenhouse gasses should be almost zero by 2050 (Klimaatberaad, 2018). The need of sustainable developments becomes more important, but how to realize these developments remains a challenge for both firms and governments.
Sustainable development is the development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs (WCED, 1987). Sustainable development can be seen as a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are made consistent with the future as well as present needs. Sustainable development consists of three dimensions: environmental integrity, economic prosperity and social equity (WCED, 1987). Firms have to interconnect all three dimensions to achieve corporate sustainable development (Bansal, 2005). Sustainable development consists of a larger number of activities, with sustainable processes, products or business models as a result (Schiederig, Tietze, & Herstatt, 2012). The concept of sustainable development practices relates to procedures, policies and techniques used by firms to monitor and control the effects of their processes on the environment (Montabon, Sroufe & Narasimhan, 2007). Sustainable technologies are important for sustainable development, as these technologies can reduce negative effects on the environment by reducing or preventing pollution, reduce resource consumption, or use less polluting or energy-intensive materials (Fu, 2019; Fu, Kok, Dankbaar, Ligthart & Van Riel, 2018). Since the adoption of sustainable technologies can have a great impact on the reduction of energy consumption and pollution emissions, I will focus on the adoption of sustainable process technologies by firms, more specifically manufacturing firms. According to Liu, Kasturiratne and Moizer (2012) manufacturing firms are “business firms that uses components, parts or raw materials to make a finished good, where these finished goods can be sold directly to consumers or to other manufacturing businesses that use them for making a different product.” Manufacturing firms
are responsible for a significantly large consumption of resources (Figure 1). The introduction of sustainable process technologies in the manufacturing industry could have a great effect on the reduction of resource consumption.
Figure 1: Energy consumption of manufacturing firms in OECD countries (US EIA, 2016)
Energy and environmental policies have a significant influence on the trends in industrial sector industry, including the manufacturing industry, of energy consumption in the OECD countries in Europe (US EIA, 2016). According to Fu (2019), environmental regulations are the main driving force for sustainable process technology adoption by organization. Adoption is the activity that occurs from the first awareness of a need to implement a technology to the final completing of the technology, and all actions or activities in-between the first and final activities (Rogers, 2003). The adoption process of sustainable process technologies can be divided into three main phases: the discovery, the development, and the deployment phase (Hollen, Van den Bosch, & Volberda, 2013). However, Rogers (2003) identifies five stages in the innovation-decision process towards adoption: knowledge, persuasion, innovation-decision, implementation and confirmation.
Fu (2019) found that the adoption rate of sustainable process technologies was low, so the question remains how effective these regulatory pressures are. Are environmental regulations insufficiently enforced? Or do companies have other reasons to not adapt sustainable process technologies? Adoption of sustainable process technologies can take a lot of time and can be expensive for firms. Financial capability is an important factor to cope with institutional pressure (Fu, 2019). Economic and financial green interests may conflict with enforceable regulations by institutions. Also, financial and economic green interests may have a positive influence on the adoption of sustainable process technologies, as it heightens the
investment in Research and Development (R&D) in green technologies (Eyraud, Clements, & Wane, 2012).
An important example to illustrate the dilemma between the institutional pressure and financial and economic (green) interests is the Dutch Environmental Management Law (‘Wet Milieubeheer’). This law came into force at the 1st of September 1980. As a part of this law, the
Environmental Management Activities Decree (‘Activiteitenbesluit Milieubeheer’) came into force at the 1st of January 2008. According article 2.15 of the Activiteitenbesluit Milieubeheer
a company has to invest in and carry out an energy-saving measure or technology if it can be paid back within five years. The energy-saving obligation only applies to business activities that use more than 50,000 kWh of electricity or more than 25,000 m3 of natural gas (article 2.15
sub 5, Activiteitenbesluit Milieubeheer). Carrying out these mandatory energy saving measures can be accompanied by high costs for firms. And since public supervisors and enforces better check on compliance with environmental legislation, firms can face a conflict between the legal pressure and the adoption of sustainable process technologies. Also, the influence of financial and economic green interests is examined. The energy-saving obligation, the Wet Milieubeheer, the Activiteitenbesluit Milieubeheer and financial and economic green interests are further elaborated in Chapter 2.
Several theories emphasize or explain organizational behavior in adopting sustainable technologies. Focusing on the regulatory pressures for manufacturing firms to adopt sustainable process technologies, the organization institutional theory is important (DiMaggio & Powell, 1983). The institutional theory consists of three elements: regulatory pressure, normative pressure and cognitive pressure (Scott, 2013). A firm’s behavior for adoption of sustainable technologies can be explained by the Technology Acceptance Model (Davis, Bagozzi, & Warshaw, 1989). Lastly the natural-resource-based view, an expansion of the resource-based view, is important. This theory mentions that businesses will be constrained by and dependent upon ecosystems (Hart, 1995, p.991).
1.2 Problem and research question
In this thesis the influence of regulatory pressure on the adoption of sustainable process technologies is examined. The direct influence of financial and economic green interests on the adoption of sustainable process technologies is also investigated. So, the aim of this thesis is to understand firm’s behavior in the adoption of sustainable technologies when a firm faces regulatory pressure and has financial and economic green interests that it must take into account to make a decision for adoption. Therefore, the research statement of this thesis is:
How do manufacturing firms deal with regulatory pressure – especially in the case of the Wet Milieubeheer – with the adoption of sustainable process technologies, and what is the influence of financial and economic green interest of firms on the relationship of awareness and enforcement on the adoption of sustainable process technologies?
To answer this question, my thesis is structured as follows. Chapter 2 consists of a theoretical framework, in which the adoption of sustainable process technologies, the regulatory pressure from the Wet Milieubeheer, and the financial and economic green interests are explained. Chapter 3 describes the problem with regulatory pressure, divided into policy awareness and policy enforcement of the Wet Milieubeheer, and financial and economic green interests of firm. Several hypotheses and a conceptual model are derived from these problems. Chapter 4 consists of an elaboration of the methodology of this thesis. The method will be a mixed-method: both a quantitative and a qualitative study are conducted. Quantitative research for research into the strength and direction of the different relationships, and qualitative research for research into the content of these relationships, how companies experience the regulatory pressure and how this is converted into actions by companies. Chapter 4 also addresses the reliability, quality, validity and research ethics of this thesis research. Chapter 5 concludes the results of my quantitative and qualitative research analysis. In this chapter I conclude if the hypotheses are validated or not. Lastly, Chapter 6 consists of a conclusion and a discussion of this research. I finish my thesis with recommendations for the companies.
For my research I use the Strategy as Practice approach. Strategy as Practice is concerned with strategy as activity in organizations, rather than strategy as the property of organizations. It is used to describe what firms do to gain insight into their behavior. The Strategy as Practice approach concerns both the fate or organizations as wholes and the practical performance of people with organizations (Whittington, 2009).
1.3 Practical and theoretical relevance
Firms have to comply with regulations imposed by the government or other regulatory institutions. Fu (2019) already mentioned two important factors that are important for institutional pressure: financial capability and information uncertainty. Financial capabilities are important for firms to meet regulations, especially regulations in the field of sustainable process technologies. To date there is no literature that describes the conflicting demands of complying with regulations and the survival of the company when the financial resources are
scarce. This thesis contributes to the literature by describing how companies deal with regulatory pressure while they also have important financial interests.
Another theoretical contribution is the examination of the specific influence of the Wet Milieubeheer on the adoption of sustainable process technologies. Fu already researched the effect of regulatory pressure on the adoption of technical sustainable practices, but she did not specifically focus on the Wet Milieubeheer as a part of the regulatory pressure. Furthermore, I research the influence of financial and economic green interests on the relationship of policy awareness and policy enforcement on the adoption of sustainable process technologies.
The practical relevance of this research is described by the struggle between the obligatory sustainable innovation and economic and financial interest that firms face. On one side there is a social and regulatory pressure for firms to be more sustainable in their production processes. On the other side, firms have also other interests, that are more economic or financial in nature. Some companies might have ‘green’ financial and economic interests, and also this might affect the adoption of sustainable process technologies. This thesis will provide some insights in this dilemma and some recommendations how firms can deal with this dilemma. Besides, also the specific example of the Wet Milieubeheer is of practical relevance for companies, since most manufacturing companies have to fulfill the obligations of the Wet Milieubeheer. And from the 1st of July 2019 companies will also be better supervised on this.
Chapter 2 – Theoretical framework
In this chapter I further elaborate on the core concepts of my problem statement. Important concepts are sustainable process technology, adoption, regulatory pressure, and specifically the Wet Milieubeheer, and economic and financial (green) interests.
2.1 Sustainable process technology 2.1.1 Sustainable development
Sustainable development focuses on meeting the needs of the present without disturbing the needs of the future generations (WCED, 1987). Innovation could support these needs by developing new products and processes. OECD’s definition of innovation is “the implementation of a new or significantly improved product, or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations” (OECD, 2009, p.2). For firms, there is a growing importance of sustainable development and innovation, as economic growth and innovation are dependent on each other. But together they can also cause environmental damage. The social and institutional pressure on firms to reduce environmental damage is rising (Bocken, Allwood, Wiley, & King, 2011). To succeed in the ecosystem, firms have to take into account social and environmental issues in the development of new products and processes. Eco-innovation could help firms to focus more on sustainable development, because it represents innovation that results in a reduction of environmental impact (OECD, 2009). In 2007, the European Commission linked eco-innovation to sustainability and mentioned that “eco-eco-innovation is any form of eco-innovation aiming at significant and demonstrable progress towards the goals of sustainable development, through reducing impacts on the environment or achieving a more efficient and responsible use of naturel resources, including energy” (EC, 2007, p.7). Kemp & Pearson (2008) defined eco-innovation as:
“the production, application or exploitation of a good, service, production process, organizational structure, or management or business method that is novel to the firm or use and which results, throughout its life cycle, in a reduction of environmental risk, pollution and the negative impacts of resource use compared to relevant alternatives” (Kemp & Pearson, 2008, p.7).
Eco-innovation is a means for a firm to be more sustainable, but it is not the same as sustainable innovation. Sustainable innovation is a process where sustainability motives (environmental, social, and financial) are incorporated into systems of firms, starting from idea generation through to R&D and commercialization (Boons, Montalvo, Quist, & Wagner, 2013). Sustainable innovation covers more than eco-innovation, because it also takes into account social goals and has a clearer link with sustainable development, as well for the short- and the long-term objectives of sustainability (Boons et al., 2013). Sustainable development is a comprehensive concept, allowing companies to develop sustainably in a lot of different ways, for instance innovating more radically or just incremental or focusing on more sustainable products or more sustainable processes. In this thesis the focus is on sustainable process technologies, because these technologies help firms to be more sustainable in the production process: use of less material, less pollution and emissions and less energy consumption. Eco-innovation is considered as a part of sustainable process technologies.
2.1.2 Sustainable process technologies
Before firms can apply the latest process technologies, they need to invest in new process technologies. Technological process innovation implies that a firm goes beyond new idea generation and begins to adopt the resulting new technological process element(s) in the firm (Knight, 1967, p.479). Process technologies are the systems of process equipment, material inputs, work or information flow and so on, used by firms to create a product or service (Utterback & Abernathy, 1975).
Eco-innovations are defined as production technologies that are able to reduce negative effects on the environment by bringing down or preventing pollution, reducing the resource consumption, or using less polluting or energy-intensive material (Schiederig et al., 2012, p.184). This definition is in line with the definitions of sustainable innovation and eco-innovation, because it can either be sustainable innovation or an eco-innovation. Sustainable process technologies can be divided into end-of-pipe technologies and cleaner production technologies (Fu, 2019). This split-up clarifies the difference in integration of the (new) process technology in the production process. End-of-pipe technologies do not involve changes in the production process, but in this situation devices or other equipment are added at the end of the production process with the aim to transform primary emissions into substances easier to handle (Del Rio González, 2005). Cleaner production technologies involve substituting or modifying the existing production process, through which cleaner production can lead to both reduction of pollution and the reduction of energy and resource usage (Frondel, Horbach, & Rennings,
2007; Del Rio González, 2005). In applying cleaner technology, firms are integrating environmental strategies and practices into their own management systems (processes) (OECD, 2009). Cleaner technology and end-of-pipe technology lead both to either reduction of pollution, or a reduction of energy and resource usage, or both (Frondel et al., 2007).
The United Nations Environment Programme (UNEP) provided a classification of sustainable process technologies in 1999. UNEP determined eight different categories of clean production. Fu (2019) further elaborated on this classification and created a framework for the classification of sustainable process technologies, which can be seen in Figure 2. As can be seen in Figure 2, cleaner technology is a broad concept and that manifests itself in a lot of opportunities for companies to produce more sustainably. Also important is the distinction between cost-increasing sustainable technology and cost-decreasing sustainable technology. Some clean technologies have a cost-saving potential by increasing the efficiency of energy or material use, while other technologies involve higher costs for the reduction of emissions (Fu, 2019). End-of-pipe technologies are often perceived as costly and ineffective by firms and therefore, firms are massively adopting cleaner technology instead of end-of-pipe technology (OECD, 2009). Seen this trend and the number of options cleaner technology provides, it is interesting to focus on cleaner technology. The distinction between increasing and cost-decreasing cleaner technologies is important in the context of the financial and economic (green) interests of firms, which will be discussed later in this chapter.
2.2 Adoption behavior
As already mentioned, adoption is the activity that occurs from the first awareness of a need to implement a technology to the final completing of the technology, and all actions or activities in-between the first and final activities (Rogers, 2003). In the literature, two main opposite approaches explain a firms’ motivation for adoption. The first approach stems from economic literature and builds on the rational actor model. According this approach, a firm is motivated to adoption by a desire for technical or efficiency gains and economic performance (Teece, 1980). The other approach represents a more sociological perspective, with more emphasis on the desire to be legitimate as a firm (Abrahamson, 1991). The basis of the second approach is the institutional theory. The institutional theory states that in an elaborated institutional environment, organizations need legitimacy to survive by conforming to prevailing norms, rules, traditions and social pressures (Meyer & Rowan, 1977). Not only economic and financial considerations explain the adoption of new technologies by firms, the institutional pressure is also important. Institutional theory suggests that organizations or firms adopt technology because of external legitimacy of their behavior. So, firms do not only have economic considerations by adopting a technology, but also social considerations (Kennedy & Fiss, 2009).
In the literature, three types of institutional pressure are recognized: coercive, mimetic, and normative. DiMaggio & Powel (1983) define these type of pressures as follows. Coercive pressure stems from political influence and can be formal or informal. In the environmental regulation context, coercive pressure is mainly caused by governmental actions (Wang, Wang, & Wang, 2018). Mimetic pressure appears when a firm is facing uncertainty and therefore imitates another firm that is successful (DiMaggio & Powell, 1983). Normative pressure stems from collective expectations, norms, and standards within a particular organization (DiMaggio & Powell, 1983). Together or alone, these pressures can push organizations to adopt certain routines and processes.
The adoption of sustainable process technologies is only complete when the process is in operation in the firm. The implementation of process technologies consists of three phases: the discovery phase, the development phase, and the deployment phase (Hollen et al., 2013) (Figure 3). The discovery phase refers to the discovery, including research, of new technological process elements by creating new technological knowledge. In the first phase, R&D are really important, because it advances the discovery of new process technologies. The development phase is the phase that the technology has to be developed from laboratory scale
and tested towards industrial scale. In the deployment phase the technology becomes operational in the firm’s full-scale production system. The time it takes before a new technology is in operation, will depend on the knowledge and experience of the firm, complexity of the technology and the costs concerned with the adoption (Hollen et al., 2013).
Figure 3: The adoption of process technologies (Hollen et al., 2013, p.36)
2.3 Regulatory pressure
Regulatory pressure can be linked to the coercive pressure, as regulatory pressure is also a result of governmental action. Earlier literature showed that the adoption of environmental innovation was an action to comply with the law and other regulations (Bossle, de Barcellos, Vieira, & Sauvée, 2016). Although even over the years other factors may play a role in the adoption of eco-innovation, regulatory pressure is still a dominant driver, and is known as the regulatory push/pull effect (Horbach et al., 2012; Rennings, 2000). Regulatory pressure stems from environmental regulation, that we understand as government legislation as well as standards and industry commitments that contribute to reducing the impact on the environment and the reduction of resource consumption (Rennings & Rammer, 2011). Environmental regulation can stimulate, or even oblige to investment activities which go beyond the implementation of environmental technologies by the company itself, to comply with the imposed standards by the government. The conformation of firms to environmental regulation depends partially on the firm’s awareness of the regulation (Fu, 2019, p.96), and can be called ‘policy awareness’. Policy awareness is the extent of an organizations’ recognition of environmental regulations. The conformation with the regulation also depends on the policy instruments that can be imposed to firms, such as fines or subsidies, which can also motivate firms to comply with the regulation. Policy enforcement is the degree to which means of various policy instruments can increase organizations’ benefits of complying and cost of noncomplying (Fu, 2019, p.96). Sometimes firms may be not able to recognize environmental measures and their cost saving potential in terms of resources or energy. In this case environmental regulation is needed to support firms in detecting measures which can save costs or resources and adopt these measures (Horbach, 2008).
In chapter 1, the Wet Milieubeheer was shortly mentioned. The associated decree, the Activiteitenbesluit, obliges firms by article 2.15, to implement sustainable process technologies when the investment can be paid back within five years. The obligation of article 2.15 exists since 2008. There are currently nineteen recognized measures lists, all applicable to a different industry sector. Seven of these lists exist since December 2015, five since July 2017 and seven of them since January 2018 (CE Delft, 2018). The Measures Lists determine the energy-saving measures that a firm, to which the Activiteitenbesluit applies, has to implement. The energy-saving measures mentioned in the Measures Lists could be recouped by firms within five years. It turned out that this obligation was not or not properly complied by firms (Sandee, 2018). Due to difficulties in enforcement and control of the Wet Milieubeheer in practice, the enforcement of the obligations in article 2.15 by the Dutch Government was also very minimal. That is one of the reasons why the government published a new obligation in October 2018. The other reason is the SER energy agreement (CE Delft, 2018). As of the first of July 2019, all firms that must comply with the obligations of article 2.15, have to inform the competent authority by submitting a report about the taken energy-saving measures, based on the recognized Measures Lists (Wiebes, 2018). From the first of July 2019 it is up to the companies to prove if they implement all obliged measures that can be recouped within five years. In this way, it will become easier for the competent authority to enforce the obligation, because firms have to make clear which measures they have taken. By all the reports of the firms, the authority has enough information to check whether the obligation has been met. The authority will be able to focus on companies who lag behind in taking energy-saving measures. The aim is that by the end of 2020 all companies fulfill the obligation of energy-saving from the Wet Milieubeheer (SER, 2018). So, it is clear that the enforcement of the Wet Milieubeheer has taken a long time, but the awareness of the Wet Milieubeheer at companies has been able to grow for years.
Legislative demands by the government, such as the obligation to firms to invest in energy-saving measures, can be an important driver to firms to implement eco-design efficiency measures (Buzuku, Farfan, Kässi, & Kraslawski, 2018; Bey, Hauschild, McAloone, 2013). As well regulatory demands as being on the forefront of future regulatory demands are important drivers to firms for environmental investments or adoption of sustainable process technologies. Companies do not want to risk the implications of not fulfilling the obligations required by regulation. This means that the ‘Wet Milieubeheer’ can be an important driver in the Netherlands for companies to invest in sustainable process technologies and energy-saving measures (specific to the Wet Milieubeheer).
2.4 Financial and economic green interests
Financial and economic drivers can be seen as an opportunity or as a constraint to a firm, dependent on the availability of financial resources within the firm and the feasibility of economic advantage. A firm has two sources for financing innovation, and thus financing sustainable process technologies. These sources are internal sources, which basically originate from retained profits or new equity, and external sources, which include bank loans or other debt contracts (Hottenrott & Peters, 2012). When firms have no internal sources available, they can use external sources to finance innovation. Unfortunately to firms, this is not always possible, and when it is possible, external fundraising for innovation is more expensive than for other types of investment. Banks and other debt holders prefer physical and re-deployable assets as security for their loans, because these can be liquidated when the firm goes bankrupt (Hottenrott & Peters, 2012; Williamson, 1988). Former research indicated that firms first and foremost use internal sources to finance innovation (Czarnitzki & Hottenrott, 2011). However, internal funds are naturally limited. Financial incentives are not mentioned often for CO2 reduction and energy saving innovations, because these investments are quite capital-intensive (Veugelers, 2012). This means that firms have to make decisions in what kind of innovations they want to invest. Important to financial and economic green interests are the availability of resources and the interest of firms to fund eco-innovation. Financial and economic green interests for investing in sustainable process technologies could be: (global) economic growth, technology advances, increasing demand of populations for a cleaner investment and increasing prices of fossil fuels (Eyraud, Clements, & Wane, 2013, p.855). To adopt new sustainable technologies, R&D is important. Most R&D departments of companies focus on improving energy efficiency of existing processes and not on new technology exploitation. On top of that, companies do not spend much on R&D (Eyraud et al., 2013, p.864).
According to Carreira & Silva (2010, p.732) financial constraints are defined as: ‘the inability of a firm or a group of firms to raise the necessary amounts to finance their optimal path of growth.’ Three expressions of financing constraints are possible: (1) no financing source, (2) delay in obtaining finance, and (3) too high interest rates of the financing (Savignac, 2008). A firm faces financial constraints in the adoption of sustainable process technologies when these projects were delayed, abandoned, or not started because of one of the three possible constraints mentioned above. The decision to innovate and the likelihood to face financial constraints are simultaneous questions and therefore can affect each other (Savignac, 2008). Financial constraints, or constraints in general, will reduce the number of options available for solving an innovation problem, the number of alternatives a firm can take, and the number of
ideas generated and implemented by a firm (Gibbert, Hoegl, & Valikangas, 2014). So, constraints are forestallers or delayers rather than enablers of innovation. Financial opportunities can have a positive effect on eco-innovation, and therefore also on the adoption of sustainable technologies (Rohdin, Thollander, & Solding, 2007). If a firm has many financial resources available, then it is able to invest more in sustainable technologies. The most important barrier for firms to not invest in energy-saving measures is the existence of other investment opportunities (De Groot, Verhoef, & Nijkamp, 2001). These investments might not be concerned with sustainability. When firms have enough financial resources available, they are not forced to choose one particular innovation to invest in. Besides, they are able to invest in more sustainable technologies and/or energy-saving measures.
Chapter 3 – Hypotheses and conceptual model
In this chapter, further elaboration of the theoretical framework takes place. Different theories and perspectives, together with the research question, will be translated in hypotheses and a conceptual model. First the direct influences of regulatory pressure: policy awareness and policy enforcement on sustainable technology adoption are addressed, also specifically for the Wet Milieubeheer in the qualitative analysis. Second, the direct influences of financial and economic green interests on the adoption of sustainable process technologies are discussed. Lastly, the influences of regulatory pressure, as policy awareness and policy enforcement, on sustainable process technology adoption, moderated by financial and economic green interests are discussed.
3.1 Regulatory pressure and sustainable technology adoption
Literature identifies regulation as the most important driver of eco-innovation (Kammerer, 2009; Bey, Hauschild, McAloone, 2013). Environmental regulations translate the demand for a greener and sustainable environment into specific policies and guidelines to firms to make clear what is required. The Wet Milieubeheer is a great example of regulatory pressure of environmental laws and regulations. The Activiteitenbesluit Wet Milieubeheer describes the guidelines for sustainable measures which firms have to comply with. In chapter 2 is described that regulatory pressure can be divided in policy awareness and policy enforcement. A firm that is not aware of institutional expectations, including legislative demands, limits an organizations’ confirmation towards the regulation (Oliver, 1999). Policy enforcement, by fines and taxes, can increase a firms’ motivation to behave more sustainable. Fu (2019) has found that both policy awareness and policy enforcement have a positive effect on the firms’ sustainable technology adoption. She found that the effect of policy awareness was stronger than the effect of policy enforcement. It is really interesting to see if these effects are also applicable to the Wet Milieubeheer, because strict enforcement of this law has actually started about a year ago, in the form of an information obligation, while the law has been in force since September 1980. Based on the relationships that Fu has found, I propose that:
Hypothesis 1a: Policy awareness of environmental laws and regulations, among which the Wet Milieubeheer, is positively related with the adoption of sustainable process technologies. Hypothesis 1b: Policy enforcement of environmental laws and regulations, among which the Wet Milieubeheer, is positively related with the adoption of sustainable process technologies.
3.2 Financial and economic green interests and sustainable technology adoption
The decision to adopt sustainable process technologies can be influenced by the financial and economic green interests and the availability of financial resources of a firm. Former research states that financing constraints can affect the level of R&D investments (Hall, Moncada-Paternò-Castello, Montresor, & Vezzani, 2015), the level of innovativeness of firms (Savignac, 2008; Scarpellini, Marín-Vinuesa, Portillo-Tarragona, & Moneva, 2018), or the number of options available for solving innovation problems (Gibbert, Hoegl, & Valikangas, 2014). To successfully introduce a new technology, financial resources are important to firms (Coad, Pellegrino, & Savona, 2016). One of the main reasons to firms to not adopt certain sustainable process technologies is the existence of other investment opportunities (De Groot, et al., 2001). If firms are interested in green-innovation, they will devote more money for green innovation. Therefore, financial and economic green interests will have a positive effect on the adoption of sustainable process technologies. When firms are interested in financing green innovation, they will rather opt for adoption of sustainable process technologies than other investments and will invest in more sustainable technologies and/or energy-saving measures. Based on this, I propose that:
Hypothesis 2: Financial and economic green interests have a positive effect on the adoption of sustainable process technologies.
3.3 The moderating effects of financial and economic green interests
According to the literature it is clear that regulatory pressure is an important driver for innovation or adoption of sustainable process technologies. An important barrier for a firm not to innovate or adopt sustainable technologies is the unavailability of financial resources (Gibbert et al., 2014; Savignac, 2008). It is interesting to research how firms deal with regulatory pressure, specifically the Wet Milieubeheer, and on the other side their financial and economic green interest in making innovation and adoption decisions. It can be justified well that financial and economic green interests strengthen the positive relationship between policy awareness and the adoption of sustainable process technologies. The moderating effect of financial and economic green interest on the relationship of policy enforcement and the adoption of sustainable process technologies remains unclear. Because of the positive effect of policy awareness on adoption of sustainable process technologies is bigger than the effect of
policy enforcement (Fu, 2019), and financial and economic green interests mean that a company already has already made money available to invest in sustainable technologies it is hard to say that financial and economic green interests again strengthen the effect of policy enforcement on the adoption of sustainable process technologies. Therefore, I propose the following:
Hypotheses 3a: Financial and economic green interests strengthen the relationship of policy awareness on the adoption of sustainable process technologies.
Hypothesis 3b: Financial and economic green interests have no effect on the relationship of policy enforcement on the adoption of sustainable process technologies.
3.4 Conceptual model
Two conceptual models have been made, based on the difference in enforcement of the Wet Milieubeheer and other environmental laws and regulations. In the first phase, there were no clear measures that firms had to implement to be more energy efficient and work in a more sustainable, or ‘greener’ way. The Wet Milieubeheer had not been enforced by means of fines or other punitive measures. Since several years, the Dutch government made it increasingly clear how firms had to comply with the provisions of the Wet Milieubeheer by publishing several measures lists. These Measures Lists make clear which energy saving measures firms have to take to comply with article 2.15 of the Wet Milieubeheer. By the first of July 2019, firms have to inform the Dutch government how they meet the requirements of article 2.15 and which measures they have taken prescribed by the measures lists. The enforcement of the Wet Milieubeheer becomes much more effective, because the government can see directly whether a company has taken all prescribed measures or not. If measures have not been implemented by a company, the competent authority can take action. This is why the policy enforcement is expected to have a positive effect on the adoption of sustainable technologies. Phase 2 in Figure 3 is the research model in this study.
Phase 1: No enforcement of the Wet Milieubeheer and other regulation environmental laws and regulations
Regulatory Pressure Awareness Enforcement
Adopt Sustainable Process
Phase 2: Enforcement of the Wet Milieubeheer and other environmental laws and regulations (Research model)
Figure 4: Conceptual Model (phase 2 is research model)
Regulatory Pressure (Wet Milieubeheer) Adoption Sustainable Process Technologies Awareness Financial & Economic green interests Enforcement Financial & Economic green interests
Chapter 4 – Methodology
This chapter elaborates on the research methods used in this thesis and why these methods are used. For the quantitative research, the constructs and items are discussed. The reliability, validity and quality of this research are also discussed in this chapter.
4.1 Mixed-method study
To answer the research question in this thesis, a mixed-method study will be carried out. This is a research methodology for conducting research that involved collecting, analyzing and integrating quantitative and qualitative research (Fielding & Fielding, 1986). A mixed-method study is appropriate, because the integration of both types of research provides a better understanding of the relationships than just a quantitative or a qualitative research study. By just doing only a quantitative research or a qualitative research, I will not be able to answer my research question. The combination of both is really important for the kind of research question that has to be answered. The advantage of a mixed-method study is the possibility of triangulation, which means that several methods and data sources can be used to examine the phenomenon in the research question (Creswell, 1999). The research question or phenomenon can be better answered respectively researched, due to using different methods and techniques. For this thesis the sequential explanatory design is used. This design involves first the collection and analysis of quantitative data and after this the collection and design of qualitative data is conducted.
4.1.1 Quantitative research
The quantitative research is necessary for research into the strength and direction of the mentioned relationships in chapter 3 and visualized in the conceptual model. To conduct the quantitative research in this thesis, a database will be used. This database is based on a self-reporting questionnaire performed by Fu in 2017 for her PhD thesis. The questionnaire got 861 valid responses from Chinese and Dutch manufacturing companies. The sample characteristics of the survey are summarized in Table 1. In the sample, companies active in the industry Machinery is over-representative. According to the characteristic Size, the companies with 100 to 249 employees are over-representative.
The database contains a number of indicators that can be used for research into the relationships between regulatory awareness, regulatory enforcement, economic relative advantage and the adoption of sustainable process technologies. In Table 2 the items and
descriptive statistics of the dependent variable, the adoption of sustainable process technologies, are outlined. The dependent variable is measured by twelve items, categorized in four different categories of technology types. In the questionnaire, firms could indicate for twelve sustainable process technologies on a scale from 1 to 5, if (1) they had no plan to adopt the technology, (2) they are preparing for decision-making, (3) they are in the process of implementation, (4) they are utilizing the technology or (5) the technology was not relevant for the company. The twelve sustainable process technologies in the questionnaire can be subdivided into four types: CO2/emission reduction, energy/material substitution, energy/material efficiency, and recycling. In Table 2 all possible sustainable process technologies are scaled as ‘adopted’ or ‘not adopted’, where answer categories 1, 2 and 5 are indicated as not adopted, and answer categories 3 and 4 are indicated as adopted. The answer of a firm that a sustainable process technology was not applicable to the firm (answer 5), is also indicated as not adopted. The reason to do this, is because the mentioned sustainable process technologies are very common and not specific, and therefore applicable for most of the firms. So, in conducted analyses, the adoption of a technology equals 1, and not adopted equals 0.
In Table 3 the items and descriptive statistics of the independent constructs are included. These constructs are: policy awareness, policy enforcement and economic relative advantage. For the items of the constructs, firms could give a score on a Likert-scale ranging from 1 to 7, where a score of 1 means ‘not at all’ or ‘never’ and a score of 7 means ‘strongly agree’, ‘extensive’ or ‘very frequently’. All scores in between did not have an explanation. This increases the validity and reliability, because there are no predetermined interpretations of the numbers between 1 and 7.
With the chosen constructs and items from the database, the hypotheses formulated in Chapter 3, can be tested by performing a regression analysis. A regression analysis is used to understand the relationship of the independent variables with the dependent variable and the strength of this relationship (Hair, Black, Babin, & Anderson, 2014, p.165). The hypotheses that are formulated are tested by a regression analysis tested with a sample of 861 companies. Another important aspect in the regression analysis are the moderating effects of financial and economic interests on the relationship of policy awareness on the adoption of sustainable technologies, and on the relationship of policy enforcement on the adoption of sustainable process technologies. A moderator affects the direction and/or strength of the relation between an independent variable and a dependent variable (Baron & Kenny, 1986). To make the moderators, the variables used – policy awareness and financial and economic interests, and regulatory enforcement and financial and economic interests – are centered and then multiplied
by each other. In this way two moderator variables are created, namely iCOawPRec and iCOenPRec. These moderator variables can have a strengthening or weakening effect on the relationship between policy awareness and the adoption of sustainable process technologies, and policy enforcement on the adoption of sustainable process technologies.
Table 1 Sample Characteristics (N=861)
Percentage Country Netherlands China 24.6% 75.4% Industry
Iron & Steel Pulp, paper & print
Chemical & pharmaceutical Machinery
Food & beverage Non-metallic minerals Petroleum refineries Non-ferrous metal Other manufacturing 9.4% 5.2% 7.3% 27.1% 8.9% 5.8% 3.5% 4.2% 28.6% Firm Size 0-19 20-49 50-99 100-249 250-499 500-999 1000 or more 5.8% 15.2% 18.7% 22.2% 12.3% 9.1% 16.7%
Table 2 Dependent variable items and descriptive (N=861)
Adoption sustainable process technologies (Cronbach’s Alpha=0.836) Technology
type Item Not adopted Adopted
CO2/ emission reduction
End-of-pipe technology to remove CO2 emission or air pollutants at the last stage of production
End-of-pipe technology to remove water or soil pollutants at the last stage of production
Modification of the production equipment, working procedures, machine instructions etc. to reduce only emission generation
61,6% 52,7% 43,7% 38,4% 47,3% 56,3% Energy/ material substitution
Fuel substitutions from coal or oil to natural gas or biomass
Transition from producing gray electricity to green electricity based on solar, wind or water
Replacement of hazardous or non-renewable inputs by less hazardous or renewable materials
Replacement of materials by recycled materials
64,4% 63,3% 55,1% 42% 35,6% 36,7% 44,9% 48% Energy/ material efficiency
Modification of the production equipment, working procedures, machine instructions etc. to increase the efficiency of material use (e.g. less material, minimize waste)
Modification of the production equipment, working procedures, machine instructions etc. to increase the efficiency of energy use
31,9%
33,9%
68,1%
66,1%
Recycling Reuse of the waste materials in the same process or for another useful application within the firm Transformation of previously discarded waste into material that can be reused or recycled for another application outside the firm
Use of recycled water or use water-saving technology
45,8% 44,7% 43,1% 54,2% 55,3% 56,9%
Table 3 Independent variables items and descriptive
4.1.2 Qualitative research
The qualitative research is used for research into the relationships of the measured constructs, which means a deepening of the relationships that have been found through quantitative research. The qualitative research includes research in the behavior of firms, how they deal with regulatory pressure when having financial constraints or opportunities, and how they convert the regulatory pressure to invest in energy-saving measures or into other activities. The qualitative research will be conducted through in-dept interviews with firms that are obliged by the Activiteitenbesluit to take energy saving measures. The energy saving measures that companies have to take can be different for each industry, because there are seventeen Measures
Variable and items Mean SD Loading
Coercive pressure – policy awareness National environmental regulations
National energy conservation and emission reduction regulations
Regional (provincial and municipal) resource saving and conservation regulations 5.08 4.92 4.95 1.58 1.71 1.70 .821 .850 .830
Coercive pressure – policy enforcement
Current subsidy schemes for sustainable technology alleviate the financial burden when investing in these technologies
On average the environmental taxation and/or polluting discharge fees are higher than the cost of pollution treatment
We got on site environmental inspection or environmental audits by public authorities 4.40 4.36 4.52 1.74 1.66 1.74 .524 .511 .396
Relative economic advantage
Sustainable technology always improves the economic performance of our firm Sustainable technology always improves the reputation of our firm
Sustainable technology always improves our product quality
Sustainable technology has reduced safety-related incidences compared to the technologies we used before
4.85 5.31 4.64 4.55 1.63 1.46 1.68 1.72 .731 .757 .794 .813
Lists, each for a different industry. The interviews are theoretically guided and open operated. Three key topics will be addressed in the interview script. First the adoption of sustainable process technologies. Second, the regulatory pressure in relation to the adoption, and third the financial and economic interests for companies to adopt sustainable process technologies. A full interview script is included in Annex 1. The interviews are conducted in collaboration with another master’s student, because we have a big overlap in subjects. In total we have conducted ten interviews with companies active in different sectors of the manufacturing industry. I was able to also use two of a bachelor’s student interviews transcripts for my qualitative analysis. This makes a total of twelve interview transcripts. In this way different perspectives or insights towards sustainable processes became visible and measurable.
The conducted interviews are coded with the following system. All relevant quotes in the interviews are highlighted and then copied to an excel file. In this excel file the quotes are per industry ID scored from 1 to 3, with score 1 being most relevant and a score of 3 being least relevant. A third column is used for open coding, to make clear the content of the quote in particular. The quotes that scored a ‘1’, and so are most relevant for the analysis of the hypotheses, are included in Annex 2, and are sorted by construct.
4.2 Reliability, validity, quality and ethics 4.2.1 Reliability, validity and quality
To increase the validity of the research, more items are used to measure the construct adoption of sustainable technologies. As well a quantitative and as a qualitative research, through a survey and in-depth interviews, will be conducted to measure the adoption of sustainable technologies. Both types of researches are complementary to each other, because the direction and strength of the relationships become visible through quantitative research, but with the qualitative research these relationships can be better explained. Using both types of researches is a cross-validation, and this contributes to the reliability and validity of the research. The cross-validation also benefits the quality of this research. Furthermore, the theoretical guidance and the open operation of the qualitative interviews contribute to the reliability and validity. In this way, there is enough space for the interviewee to come up with a company’s specific interests and measures.
4.2.2 Ethics
In the conducted research, the privacy and anonymity of the firms and individuals interviewed are respected. This means that the responses are not traceable to interviewed firms and/or individuals. As the researcher, I will be transparent about the research I conduct and questions I ask in the interviews. Furthermore, this research contributes to the society as a whole by giving more insights into the behavior of firms towards sustainability and regulation and how the government can act more effectively in enforcing the Wet Milieubeheer and other laws and regulations. Lastly, the agreements and appointments made with companies will be honored, for example anonymity and sharing the final results.
Chapter 5 - Research results
5.1 Quantitative analysis and results
The database used for the quantitative research is constructed by self-reporting questionnaires completed by Chinese and Dutch manufacturing companies. The total response on the questionnaire was 861. 158 valid responses came from Dutch manufacturing firms. The responses of the Chinese manufacturing companies serve as a control variable in the regression analysis.
5.1.1 Assumptions Regression analysis
According to Hair et al. (2014) there are several assumptions to be met before conducting a regression analysis. The following assumptions are discussed and checked: sample size, constant variance of the error terms, linearity, multicollinearity, and independence of error terms. In conclusion, all assumptions are met, and no clear deviations were visible. A full elaboration of the assumptions is included in Annex 3.
5.1.2 Scaling of the independent constructs
The used items to measure the independent variables (constructs) in the conducted analysis are based on Fu’s conducted factor analysis. Since these items load best on the variables, this regression analysis is conducted with the same items. The items used for each construct are included in Table 3 in Chapter 4. Policy awareness and policy enforcement are both measured by three items, and economic relative advantage is measured by four items.
The values of all constructs for the score on mean are above average, because all scores are higher than 4. This means that in general, companies were above average aware of environmental laws and regulation (policy awareness). The pressure to comply with laws and regulation (policy enforcement) is also above average felt by companies, but this average was slightly lower than the mean of policy awareness. Lastly, the construct economic relative advantage is above average important to firms when implementing new sustainable technologies, because its mean score tends to a 5.
The constructs policy awareness and economic relative advantage have both a good reliability, since the Cronbach’s Alpha is above 0.70. The Cronbach’s Alpha of the construct policy enforcement does not have the desirable value, but it is acceptable. Furthermore, deleting an item of the construct policy enforcement does not have a great effect on the value of Cronbach’s Alpha, since the Cronbach’s Alpha will only increase to 0.672.
Table 4 Independent constructs descriptive and reliability (N=861)
Construct Mean SD Variance Cronbach’s
Alpha
Number of items
Policy awareness 4.985 1.540 0.008 0.917 3
Policy enforcement 4.426 1.325 0.007 0.664 3
Economic relative advantage 4.836 1.355 0.115 0.852 4
5.1.3 Adoption of sustainable process technologies
In Table 2 the adoption rate of each item of the dependent variable are visible. The adoption rates of the items show that especially the measures about energy and material efficiency are used in manufacturing companies. Second most adopted items are the measures about recycling. Next come the measures with regard to CO2 emission or reduction and lastly the measures towards energy or material substitution. The results of the adoption rates of the particular measures make clear that efficiency is particular important in manufacturing companies.
5.1.4 Results of the Regression analysis
The regression analysis is hierarchically structured and consists of four models. The adjusted R2 value for Model 1 is 14.7%, for Model 2 20.6%, for Model 3 31.2% and for Model 4 31.4%
(Table 5). The R2 increased substantially after including the independent variables policy
awareness and policy enforcement. The first model of the regression analysis contains the control variables, the second model consists of the control variables and the independent variable Economic relative advantage. The third model includes the control variables, Economic relative advantage and the independent variables of coercive pressure: policy awareness and policy enforcement. The fourth model consists of the control variables, the independent variables Economic relative advantage, policy awareness and policy enforcement and the moderation variables: Policy awareness*economic relative advantage and policy enforcement*economic relative advantage. All models in the regression analysis are significant. Because of the high explanatory power of Model 3 and Model 4, these models are used for the validation or rejection of the research hypotheses. All of the results of the regression analysis are included in Table 5.
Table 5 Standardized coefficients of the hierarchical regression analysis
*p<0.05. **p<0.01. ***p<0.001 Interaction variables are centered
Variable
Model 1 Model 2 Model 3 Model 4 China
Industry
Iron and Steel Pulp, paper, print Chemical pharmaceutical Food and beverage Non-metallic minerals Petroleum refineries Non-ferrous metal Other Machinery Firm Size Size 75 Size 175 Size 375 Size 750 Size 1000+ Size_25
Economic relative advantage
Policy awareness Policy enforcement
Policy awareness*economic advantage Policy enforcement*economic advantage
.112** .016 .060 .055 .020 .008 -.033 -.018 .002 Ref. .108** .172*** .183*** .319*** .307*** Ref. .028 . 017 .051 .051 .032 .014 -.025 -.013 .008 Ref. .103** .145*** .146*** .274*** .254*** Ref. .271*** -.037 .011 .040 .044 .022 -.002 -.016 -.023 -.010 Ref. .052 .090* .083* .205*** .165*** Ref. .039 .301*** .218*** -.036 .009 .040 .045 .025 -.001 -.020 -.024 -.010 Ref. .054 .092* .084* .202*** .164*** Ref. .045 .309*** .214*** .032 .012 Model Statistics Adjusted R2 .147 .206 .312 .314 F change 11.621 63.444 67.422 .818 df 1 14 1 2 2 df 2 846 845 843 841 Sig. F Change .000 .000 .000 .442 Sig. Durbin-Watson Statistic .000 .000 .000 .000 2.048
Direct effects
In chapter 3 the following hypotheses were proposed as direct effects:
Hypothesis 1a: Policy awareness of environmental laws and regulations, among which the Wet Milieubeheer, is positively related with the adoption of sustainable process technologies.
Hypothesis 1b: Policy enforcement of environmental laws and regulations, among which the Wet Milieubeheer, is positively related with the adoption of sustainable process technologies.
Hypothesis 2: Financial and economic green interests have a positive effect on the adoption of sustainable process technologies.
In the main-effects only model 3 of the regression analysis, policy awareness has a significant effect on the adoption of sustainable process technologies with a Beta coefficient of .301 (p=.000). This means that hypothesis 1a is supported in the regression analysis. Hypothesis 1b is also supported, because the effect of policy enforcement on the adoption of sustainable process technologies has a significant effect with a Beta coefficient of .218 (p=.000). The effect of policy enforcement on the adoption of sustainable process technologies is weaker than the effect of policy awareness. In full model 4 the moderator variables are added. The addition of these variables has a small, negligible effect for the direct effects of policy awareness and policy enforcement. The effect of policy awareness increased from .301 to .309 (p=.000). The effect of policy enforcement decreased from .218 to .214 (p=.000). In conclusion, policy awareness and policy enforcement both have a significant effect on the adoption of sustainable process technologies. This means that hypotheses 1a and 1b are both supported in the regression analysis.
Economic relative advantage does not have a significant effect on the adoption of sustainable process technologies in model 3 and 4 of the regression analysis. In model 3 the economic relative advantage only has a non-significant Beta coefficient of .039 (p=.309) and in model 4 a non-significant Beta coefficient of .045 (p=.247). Interesting is that in model 2 of the regression analysis, there is a clear significant direct effect of economic relative advantage on the adoption of sustainable process technologies with a Beta coefficient of .271 (p=.000). But, when looking at the results of model 3 and model 4 of the regression analysis, this significant effect has vanished. This means that by adding the other independent variables and the moderator variables, the effect of economic relative advantage is overruled.
Based on the conducted hierarchical structured regression analysis, hypothesis 1a is accepted, because policy awareness positively influences the adoption of sustainable process technologies. Hypothesis 1b is also accepted, as policy enforcement also has a significant positive influence on the adoption of sustainable process technologies. Hypothesis 2 is rejected, because economic relative advantage does have a positive effect on the adoption of sustainable process technologies, but this effect is not significant. An interesting observation is the effect of economic relative advantage. Without the independent variable policy awareness and policy enforcement in the regression model (Model 2), economic relative advantage has a direct significant effect on the adoption of sustainable process technologies. Apparently, there is a big overlap between the effect of policy awareness and policy enforcement, and the effect of economic relative advantage. It is possible that in the eyes of many companies, policy awareness and policy enforcement are closely linked to economic relative advantage.
Indirect effects (moderation variables)
In chapter 3 the following hypotheses were proposed for indirect effects:
Hypotheses 3a: Financial and economic green interests strengthen the relationship of policy awareness on the adoption of sustainable process technologies.
Hypothesis 3b: Financial and economic green interests have no effect on the relationship of policy enforcement on the adoption of sustainable process technologies.
Hypotheses 3a is rejected, because in the regression analysis this moderation variable did not have a significant effect on the adoption of sustainable technologies. The effect of economic relative advantage via the effect of policy awareness on the adoption of sustainable technologies has a positive, non-significant Beta coefficient of .032 (p=.332). Hypothesis 3b is accepted, because financial and economic green interests did indeed have no effect on the relationship of policy enforcement on the adoption of sustainable process technologies. The effect of economic relative advantage via the effect of policy enforcement on the adoption of sustainable technologies has a positive, non-significant Beta coefficient of 0.012 (p=.714). This means that economic relative advantage does not strengthen the influence of policy awareness or policy enforcement on the adoption of sustainable technologies. So therefore, hypothesis 3a is rejected. Hypothesis 3b is accepted, because economic relative advantage does indeed have no effect on the relationship between policy enforcement and the adoption of sustainable technologies.
